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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ANC RENTAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[ANC RENTAL CORPORATION LOGO]
April 2, 2001
Dear Stockholder:
We are pleased to invite you to attend the Annual Meeting of Stockholders
of ANC Rental Corporation to be held at 1:00 p.m. on Monday, May 14, 2001, at
the Museum of Art, One East Las Olas Boulevard, Fort Lauderdale, Florida 33301.
The accompanying Notice of Annual Meeting and Proxy Statement describes the
specific matters to be acted upon at the meeting. We will also report on the
progress of ANC Rental Corporation and provide an opportunity for stockholders
to ask questions of general interest.
Whether you own a few or many shares of ANC stock and whether or not you
plan to attend the meeting in person, it is important that your shares be
represented at the Annual Meeting. PLEASE DATE AND SIGN YOUR PROXY CARD AND
RETURN IT IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE. The Board of Directors
unanimously recommends that stockholders vote FOR each of the matters described
in the Proxy Statement to be presented at the Annual Meeting. We look forward to
seeing you on May 14th in Fort Lauderdale. Thank you.
Sincerely,
/s/ Michael S. Egan
Michael S. Egan
Chairman of the Board
Enclosures
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ANC RENTAL CORPORATION
200 SOUTH ANDREWS AVENUE
FORT LAUDERDALE, FLORIDA 33301
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, MAY 14, 2001
To the Stockholders of ANC Rental Corporation:
Notice is hereby given that the 2001 annual meeting of stockholders of ANC
Rental Corporation will be held at 1:00 p.m. on Monday, May 14, 2001, at The
Museum of Art, One East Las Olas Boulevard, Ft. Lauderdale, Florida 33301 for
the following purposes:
1. To elect six members of our board of directors to serve until our
next annual meeting of stockholders or until their successors are
elected and qualified.
2. To approve an amendment to our stock option plan.
3. To ratify the appointment of Arthur Andersen LLP as our independent
auditors for the fiscal year ending December 31, 2001.
4. To transact such other business as may properly be brought before
the meeting or any adjournment of the meeting.
Our board of directors has fixed the close of business on March 16, 2001 as
the record date for determination of the stockholders entitled to notice and to
vote at the annual meeting. Only holders of record of our common stock on that
date will be entitled to receive notice of and to vote at the meeting.
Stockholders are cordially invited to attend the annual meeting. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY. The giving of your proxy will not affect your right to vote in
person in the event you find it convenient to attend the meeting. You may revoke
the proxy at any time before the closing of the polls at the meeting by delivery
to the company of a subsequently executed proxy or a written notice of
revocation or by voting in person at the meeting. Attendance at the annual
meeting will be limited to stockholders and invited guests of the company.
By order of the Board of Directors,
Howard D. Schwartz
/s/ Howard D. Schwartz
Senior Vice President, Secretary
and General Counsel
April 2, 2001
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ANC RENTAL CORPORATION
------------------------
PROXY STATEMENT
This proxy statement is furnished to stockholders of ANC Rental
Corporation, a Delaware corporation, in connection with the solicitation by our
board of directors of proxies to be voted at our annual meeting of stockholders
to be held at The Museum of Art, One East Las Olas Boulevard, Ft. Lauderdale,
Florida 33301, on Monday, May 14, 2001, at 1:00 p.m. (local time), and any
adjournment of the annual meeting. Action will be taken at the annual meeting to
elect six directors, amend our stock option plan, and ratify the appointment of
our auditors.
Holders of record of outstanding shares of our common stock, $.01 par
value, at the close of business on March 16, 2001, are entitled to vote at the
annual meeting or any adjournment of the annual meeting. Voting rights are
vested exclusively in the holders of the common stock. Each share of common
stock outstanding on the record date will be entitled to one vote on all matters
to be voted upon. Shares which we hold as treasury shares are not entitled to
vote. As of the close of business on the record date, March 16, 2001, 45,182,550
shares of common stock were outstanding. This proxy statement, the accompanying
form of proxy and our annual report to stockholders for the fiscal year ended
December 31, 2000 are being mailed on or about April 9, 2001 to each stockholder
entitled to vote at the meeting.
VOTING AND REVOCATION OF PROXIES
When proxies in the enclosed form are returned properly executed, the
shares represented by such proxies will be voted at the annual meeting and,
where instructions have been given by the stockholder, will be voted in
accordance with such instructions. If the stockholder does not otherwise
specify, the stockholder's shares of common stock will be voted for the election
of the nominees described in the proxy statement as directors of the company, in
favor of the proposed amendment to our stock option plan and for the appointment
of Arthur Andersen LLP as our independent auditors for the fiscal year ending
December 31, 2001. If any other matter is properly presented for action at the
meeting, the persons named in the enclosed proxy will vote on such matter in
their discretion.
The holders of a majority in number of the total outstanding shares of
common stock entitled to vote at the meeting, present in person or represented
by proxy, constitute a quorum. Assuming a quorum is present, the affirmative
vote of a plurality of the votes cast at the meeting and entitled to vote in the
election will be required for the election of directors and the affirmative vote
of a majority of the votes cast at the meeting and entitled to vote thereon will
be required to act on all other matters to come before the annual meeting,
including the amendment of our stock option plan and the appointment of the
independent auditor.
If you return a signed proxy form or attend the meeting but choose to
abstain from voting on any proposal, you will be considered present at the
meeting and not voting in favor of the proposal. Since most proposals pass only
if they receive favorable votes from a majority of votes present at the meeting,
the fact that you are abstaining and not voting in favor of a proposal will have
the same effect as if you had voted against the proposal. In contrast, a "broker
non-vote," where a broker withholds authority to cast a vote as to a certain
proposal, is deemed not present at the meeting with regard to that proposal.
Votes will be counted prior to the meeting by employees of Equiserve Trust
Company, N.A., our independent transfer agent and registrar. Votes cast by proxy
or in person at the annual meeting will
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be tabulated by the inspectors of election appointed for the meeting and will be
counted in determining whether or not a quorum is present.
Any proxy may be revoked by the stockholder, either by attending the
meeting and voting in person or by submitting a revocation in writing to ANC
Rental Corporation (including a subsequent signed proxy) at any time prior to
the closing of the polls at the meeting.
ELECTION OF DIRECTORS
Our board of directors currently consists of six directors. Six directors
are to be elected at the annual meeting to hold office as directors until the
2002 annual meeting of stockholders or until their respective successors have
been duly elected and qualified. Unless otherwise directed, proxies in the
accompanying form will be voted FOR the nominees listed below. All nominees have
consented to be named and to serve if elected. If any one or more of the
nominees is unable to serve or for good cause will not serve, proxies will be
voted for the substitute nominee or nominees, if any, proposed by the board of
directors. The board has no knowledge that any nominee will or may be unable to
serve or will or may withdraw from nomination. Each nominee will be elected if
he receives the affirmative vote of a plurality of the votes cast by holders of
shares of common stock at the annual meeting.
Our board of directors proposes the election of the following directors of
ANC Rental Corporation for a term of one year. All of the nominees are presently
directors of ANC Rental Corporation. We have described below for each nominee
his name, age, the year in which he became one of our directors, all positions
and offices with ANC Rental Corporation which he holds, if any, his principal
occupations during at least the last five years and any additional directorships
in publicly-held companies or registered investment companies.
MICHAEL S. EGAN, 61, has been our Chairman of the Board since June 2000 and
our Chief Executive Officer since December 28, 2000. Mr. Egan also serves as
Chairman and Chief Executive Officer of Certified Vacations, Inc., a wholesale
tour operator. Mr. Egan has been the controlling investor of Dancing Bear
Investments, a privately held investment company, since 1996. Mr. Egan also
serves as a director of Boca Resorts, Inc., a leisure, recreation and
entertainment company which owns and operates several luxury resort hotels and
the Florida Panthers professional sports franchise. In addition, Mr. Egan has
served as Chairman of the Board of theglobe.com, Inc., an online community site,
since August 1997. Mr. Egan was the majority owner and Chairman of Alamo Rent-
A-Car, Inc. from 1986 until Alamo was acquired by AutoNation, Inc. in November
1996. Mr. Egan began his career with Alamo in 1976 and held various management
and ownership positions until he bought a controlling interest in 1986.
GORDON M. BETHUNE, 59, has been one of our directors since June 2000. Since
September 1996, Mr. Bethune has served as Chairman of the Board and Chief
Executive Officer of Continental Airlines, Inc., the nation's fifth largest
passenger airline carrier. Mr. Bethune also served as Continental's President
and Chief Executive Officer from November 1994 until September 1996 and as its
President and Chief Operating Officer from February 1994 until November 1994.
Mr. Bethune has been a director of Continental since August 1994. Mr. Bethune
also serves on the board of directors of Honeywell International Inc., an
international developer and supplier of advanced-technology products, systems
and services.
J.P. BRYAN, 61, has been one of our directors since June 2000. From January
1995 until February 1998, Mr. Bryan served as President and Chief Executive
Officer of Gulf Canada Resources, Ltd., which is engaged in oil and gas
exploration and production. Mr. Bryan has served as the Chairman of the Board of
Torch Energy Advisors, Inc., an outsourcing and service provider to the oil and
gas
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industry, since 1981, and served as its Chief Executive Officer from 1981 until
1996. From 1990 until 1995, Mr. Bryan served as Chairman and Chief Executive
Officer of Nuevo Energy Company, a company involved in the oil and gas industry.
From 1990 until 1996, Mr. Bryan served as Chairman and Chief Executive Officer
of Bellwether Exploration Company, an oil and gas exploration company. Mr. Bryan
also serves on the board of directors of Bellwether Exploration and AutoNation,
Inc.
JOHN O. GRETTENBERGER, SR., 63, has been one of our directors since June
2000. Since February 1997, Mr. Grettenberger has served as the President of
LorAnn Oils, Inc., a privately held essential oils company. In 1984, Mr.
Grettenberger was named a Vice President of General Motors Corporation, the
world's largest automobile manufacturer, and he served General Motors in various
capacities, most recently as the General Manager of the Cadillac Motor Car
Division, until February 1997.
H. WAYNE HUIZENGA, 63, has been one of our directors since June 2000. Since
August 1995, Mr. Huizenga has served as Chairman of the Board of AutoNation,
Inc., which owns the nation's largest chain of franchised dealerships. From
August 1995 to September 1999, Mr. Huizenga served as Chief Executive Officer or
Co-Chief Executive Officer of AutoNation. Since May 1998, Mr. Huizenga has
served as Chairman of the Board of Republic Services, Inc., a leading provider
of non-hazardous solid waste collection and disposal services. From May 1998 to
December 1998, Mr. Huizenga also served as the Chief Executive Officer of
Republic Services. Since September 1996, Mr. Huizenga has served as the Chairman
of the Board of Boca Resorts, Inc. Since January 1995, Mr. Huizenga also has
served as the Chairman of the Board of Extended Stay America, Inc., an owner and
operator of extended stay lodging facilities. Since June 1998, Mr. Huizenga has
served as a director of NationsRent, Inc., a national equipment rental company
that markets products and services primarily to a broad range of construction
and industrial customers. Since October 1998, Mr. Huizenga has served as a
director of theglobe.com, an Internet on-line community. Since May 2000, Mr.
Huizenga has been Vice Chairman of the Board of Zixit Corporation, which
develops and markets products and services that enhance privacy security and
convenience over the Internet. From September 1994 until October 1995, Mr.
Huizenga served as the Vice Chairman of Viacom Inc, a diversified entertainment
and communications company. During the same period, Mr. Huizenga also served as
the Chairman of the Board of Blockbuster Entertainment Group, a division of
Viacom. From April 1987 through September 1995, Mr. Huizenga served as the
Chairman of the Board and Chief Executive Office of Blockbuster Entertainment
Corporation, during which time he helped build Blockbuster from a 19 store chain
into the world's largest video rental company. In September 1994, Blockbuster
merged into Viacom. In 1971, Mr. Huizenga co-founded Waste Management, Inc.,
which he helped build into the world's largest integrated solid waste services
company, and he served in various capacities, including President, Chief
Operating Office and a director from its inception until 1984. Mr. Huizenga also
owns the Miami Dolphins and Pro Player Stadium in South Florida.
WILLIAM N. PLAMONDON, III, 53, has been one of our directors since June
2000. Mr. Plamondon founded R.I. Heller Company LLC, a management consulting
firm, in April 1998 and serves as its President and Chief Executive Officer.
Additionally, as of December 2000, Mr. Plamondon became a senior advisor to E &
Y Capital Advisors LLC. Prior to founding R.I. Heller, Mr. Plamondon served as
President and Chief Executive Officer of First Merchants Acceptance Corporation,
a national financing company, from April 1997 until April 1998, and served as a
director of First Merchants from March 1995 until April 1998. Mr. Plamondon was
the President of Budget Rent-A-Car Corporation from June 1992 until February
1997 and held other management positions with Budget from 1978 until 1992.
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INFORMATION CONCERNING THE
BOARD OF DIRECTORS AND COMMITTEES
Our board of directors directs the management of our business and affairs,
as provided by Delaware law, and conducts its business through meetings of the
board and three standing committees: the executive committee, the audit
committee and the compensation committee. In addition, from time to time,
special committees may be established under the direction of the board when
necessary to address specific issues. We have no nominating or similar
committee.
BOARD MEETINGS AND COMMITTEES
Our board of directors held four meetings and took one action by unanimous
consent in lieu of a meeting during fiscal 2000. Each current director attended
100% of the aggregate of (i) meetings of the board held during the period for
which he served as a director and (ii) meetings of all committees held during
the period for which he served on those committees.
The executive committee of the board of directors consists of Messrs. Egan
(Chair) and Huizenga. The executive committee has the authority to approve a
number of the functions of the board of directors in order to facilitate the
need to take corporate action without the need to call a meeting of the full
board of directors. The executive committee held no meetings during fiscal 2000.
The compensation committee of the board of directors consists of Messrs.
Bethune, Grettenberger (Chair) and Plamondon. The compensation committee is
responsible for compensation, including setting our compensation philosophy and
policies, and determining the compensation for all executive officers. The
compensation committee is also responsible for administering our executive
compensation plans and programs, including the ANC Rental Corporation Stock
Option Plan and the Employee Stock Purchase Plan. The compensation committee
held two meetings and took one action by unanimous consent in lieu of a meeting
during fiscal 2000.
The audit committee of the board of directors consists of Messrs. Bryan,
Grettenberger and Plamondon (Chair). The audit committee's principal functions
are to review the scope of the annual audit by our independent auditors, review
our annual financial statements and the related audit report as prepared by the
independent auditors, recommend the selection of independent auditors each year
and review our internal controls and accounting policies and procedures. The
audit committee also recommends to the board the appointment of the independent
public accountants for the Company. All of the members of our audit committee
are independent directors as defined by the Nasdaq National Market rules. The
audit committee held four meetings during fiscal 2000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Decisions with respect to compensation are made by the compensation
committee of our board of directors. The members of the compensation committee
as of December 31, 2000 were Messrs. Bethune, Grettenberger and Plamondon. None
of the members of the compensation committee has ever been an officer or
employee of ANC Rental Corporation or any of our subsidiaries.
DIRECTOR COMPENSATION
Directors who are full time employees of ANC Rental Corporation receive no
compensation for serving on our board of directors or board committees. For
fiscal 2000, each non-employee director received options to purchase 100,000
shares of our common stock, except for our Chairman who received options to
purchase 750,000 shares of our common stock. Beginning in fiscal 2001, each non-
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employee director will receive annually options to purchase 50,000 shares of our
common stock. The options are fully vested upon grant and are exercisable at an
option price equal to the fair market value of a share of common stock on the
date of grant.
For fiscal 2000, each non-employee director who chaired a committee of the
board of directors received a retainer of $3,500 for each committee chairmanship
held and $2,500 for each non-chairman committee position held. These amounts
will also be paid for fiscal 2001. For fiscal 2001, each non-employee director
will also receive an annual retainer of $25,000. All non-employee directors are
entitled to the use of a vehicle, while founding non-employee directors and
those directors with three years of service are entitled to the use of a vehicle
for life. For fiscal 2000, for those directors who used a vehicle, the cost to
the Company ranged from $923 to $3,463 depending on the model selected and the
number of months of usage. Directors are also reimbursed for traveling costs and
other out-of-pocket expenses incurred in attending board and committee meetings.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table includes information regarding the beneficial ownership
of our common stock by (1) each person who we believe to be the beneficial owner
of more than five percent of our common stock, based on a review of filings with
the Securities and Exchange Commission, (2) each of our directors, (3) each of
the executive officers named in the summary compensation table and (4) all of
our directors and executive officers as a group. In most cases, each individual
has sole voting and investment power with respect to the shares he or she
beneficially owns. When this is not the case, voting and investment power is
clarified in a footnote.
NUMBER OF SHARES PERCENTAGE OF
NAME BENEFICIALLY OWNED CLASS(1)
- ---- ------------------ -------------
5% STOCKHOLDERS:
ESL Partners, L.P. and related entities(2).................. 7,253,873 16.05%
Michael S. Egan(3).......................................... 3,453,943 7.64
H. Wayne Huizenga(4)........................................ 3,262,143 7.22
Michael DeGroote(5)......................................... 2,478,900 5.49
Harris W. Hudson(6)......................................... 2,349,597 5.20
OTHER DIRECTORS:
Gordon M. Bethune(7)........................................ 150,000 *
J.P. Bryan(7)............................................... 150,000 *
John O. Grettenberger, Sr.(7)............................... 155,000 *
William N. Plamondon(7)..................................... 152,722 *
NAMED EXECUTIVE OFFICERS:
Michael S. Karsner(8)....................................... 299,577 *
Karen L. Beard(9)........................................... 93,811 *
Kathleen W. Hyle(10)........................................ 66,569 *
Howard D. Schwartz(11)...................................... 53,373 *
Mary Wood(12)............................................... 37,845 *
All directors and executive officers as a group (16
persons)(13).............................................. 7,974,517 16.90%
- ---------------
* The percentage of shares of common stock beneficially owned does not exceed
one percent of the outstanding shares of common stock.
(1) Percentages are based on 45,182,550 shares of common stock outstanding on
March 16, 2001. Calculations of percentage of beneficial ownership assume
the exercise by only the named stockholder of all options for the purchase
of common stock held by such stockholder which are exercisable within 60
days of March 16, 2001.
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(2) Includes (1) 4,656,749 shares owned by ESL Partners, L.P., a Delaware
limited partnership, (2) 1,063,271 shares owned by ESL Limited, a Bermuda
corporation, (3) 136,412 shares owned by ESL Institutional Partners, L.P.,
a Delaware limited partnership, and (4) 1,397,441 shares owned by ESL
Investors, L.L.C., a Delaware limited liability company. The address of ESL
Partners, L.P., ESL Institutional Partners, L.P. and ESL Investors L.L.C.
is one Lafayette Place, Greenwich, CT 06830. The address of ESL Limited is
Hemisphere House, 9 Church Street, Hamilton, Bermuda. This information is
based on a Form 4 dated February 12, 2001.
(3) Includes (1) 110,000 shares owned directly by Mr. Egan, (2) 2,152,863
shares owned by the Michael S. Egan Living Trust, of which Mr. Egan is the
sole trustee, (3) an aggregate of 441,080 shares owned by certain trusts
established for the benefit of members of Mr. Egan's family and (4) options
to acquire 750,000 shares of common stock which are exercisable within 60
days of March 16, 2001. Mr. Egan's address is 200 South Andrews Avenue,
Fort Lauderdale, Florida 33301. This information is based on a Schedule 13G
filed by Mr. Egan dated February 14, 2001.
(4) Includes (1) 3,111,777 shares beneficially owned by Huizenga Investments
Limited Partnership, a Nevada limited partnership, and Huizenga
Investments, Inc. a Nevada Corporation, (2) 366 shares owned directly by
Mr. Huizenga and (3) options to acquire 150,000 shares of common stock
which are exercisable within 60 days of March 16, 2001. Mr. Huizenga's
business address is 450 East Las Olas Boulevard, Fort Lauderdale, Florida
33301. This information is based on a Schedule 13D filed by Mr. Huizenga
dated July 7, 2000.
(5) 2,453,900 of the shares beneficially owned by Mr. DeGroote are held in the
name of Westbury (Bermuda) Ltd., a Bermuda corporation, of which he is the
sole shareholder. Mr. DeGroote's and Westbury (Bermuda) Ltd.'s address is
Victoria Hall, 11 Victoria Street, P.O. Box HM 1065, Hamilton, HMEX,
Bermuda. This information is based on a Schedule 13G filed by Mr. DeGroote
dated July 13, 2000.
(6) 2,312,097 of the shares beneficially owned by Mr. Hudson are beneficially
owned by the Harris W. Hudson Limited Partnership, a Nevada limited
partnership, and Harris W. Hudson, Inc. a Nevada Corporation controlled by
Mr. Hudson. Mr. Hudson's business address is 110 S.E. Sixth Street, Fort
Lauderdale, Florida 33301. This information is based on a Schedule 13G
filed by Mr. Hudson dated July 7, 2000.
(7) Includes 150,000 shares of common stock issuable upon exercise of options
that are exercisable within 60 days from March 16, 2001.
(8) Includes 187,500 shares of common stock issuable upon exercise of options
that are exercisable within 60 days from March 16, 2001. Mr. Karsner's
employment with the company terminated in December 2000.
(9) Includes 93,750 shares of common stock issuable upon exercise of options
that are exercisable within 60 days from March 16, 2001.
(10) Includes 62,500 shares of common stock issuable upon exercise of options
that are exercisable within 60 days from March 16, 2001.
(11) Includes 37,500 shares of common stock issuable upon exercise of options
that are exercisable within 60 days from March 16, 2001.
(12) Includes 37,500 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from March 16, 2001.
(13) Includes 2,008,750 shares of common stock issuable upon exercise of options
that are exercisable within 60 days from March 16, 2001.
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COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table describes in summary form all compensation for all
services rendered in all capacities to ANC Rental Corporation, paid or accrued
during the year ended December 31, 2000, to the individuals who served as our
Chief Executive Officer during fiscal 2000 and to our four most highly
compensated executive officers in fiscal 2000 who were executive officers on
December 31, 2000.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING
NAME AND COMPENSATION OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) SARS(#) COMPENSATION($)(2)
------------------ ---- --------- -------- ------------ ------------ ------------------
Michael S. Egan.................... 2000 -- -- 172,720(4) 750,000 --
Chairman and Chief
Executive Officer(3)
Michael S. Karsner................. 2000 520,000 -- -- 750,000 1,283
Former President and
Chief Executive Officer(5)
Karen L. Beard..................... 2000 400,000 -- -- 375,000 516
President, North America
Alamo and National
Kathleen W. Hyle................... 2000 350,000 -- -- 250,000 280
Senior Vice President and Chief
Financial Officer
Howard D. Schwartz................. 2000 330,000 -- -- 150,000 938
Senior Vice President,
General Counsel and
Secretary
Mary Wood.......................... 2000 320,000 -- -- 150,000 468
Senior Vice President,
Shared Services
- ---------------
(1) The value of perquisites and other personal benefits paid does not exceed
the lesser of $50,000 or 10% of the total annual salary and bonus reported
for the executive officers other than Mr. Egan and, therefore, is not
required to be disclosed pursuant to Securities and Exchange Commission
rules.
(2) These amounts reflect the incremental cost of life insurance.
(3) Mr. Egan has been our Chairman since June 2000 and was named our Chief
Executive Officer on December 28, 2000.
(4) This reflects the amount we paid in respect of Mr. Egan's personal use of a
private airplane.
(5) Mr. Karsner's employment with the company terminated in December 2000. Mr.
Karsner is entitled to severance payments as described below under
"Employment Arrangements."
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OPTION GRANT TABLE
The following table describes the number of options granted to the
executive officers named in the summary compensation table under our stock
option plan during fiscal 2000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1)
--------------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL EXERCISE ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS OR PRICE APPRECIATION FOR
UNDERLYING GRANTED TO BASE OPTIONS TERM
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ------------ ---------------- ----------- --------------- --------- ---------
Michael S. Egan................. 750,000 11.4% $5.1875 7-3-10 2,446,793 6,201,000
Michael S. Karsner (2).......... 750,000 11.4% $5.1875 6-28-03 613,259 1,287,796
Karen L. Beard.................. 375,000 5.7% $5.1875 7-3-10 1,223,250 3,100,500
Kathleen W. Hyle................ 250,000 3.8% $5.1875 7-3-10 815,500 2,067,000
Howard D. Schwartz.............. 150,000 2.3% $5.1875 7-3-10 489,300 1,240,000
Mary Wood....................... 150,000 2.3% $5.1875 7-3-10 489,300 1,240,000
- ---------------
(1) The options vest in four equal installments commencing on January 1, 2001
and each of the following three anniversaries thereafter, except for Mr.
Egan's grant which vested immediately. The exercise price represented 100%
of the fair market price as computed by the average of the high and low
price on July 3, 2000, the date the option was granted.
(2) Mr. Karsner's options will cease vesting in June 2002 at which time 375,000
will have vested and will expire one year thereafter if not exercised. The
remaining shares will not vest.
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OPTION EXERCISE TABLE
The following table describes the number of shares of common stock covered
by both exercisable and unexercisable options granted to our executive officers
named in the summary compensation table under our stock option plan as of
December 31, 2000. No options were exercised by these executive officers during
fiscal 2000.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS/SARS AT FISCAL YEAR- THE-MONEY OPTIONS/SARS
END(#) AT FISCAL YEAR-END($)(1)
---------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------- ----------- -------------
Michael S. Egan............................. 750,000 -- -- --
Michael S. Karsner(2)....................... -- 750,000 -- --
Karen L. Beard.............................. -- 375,000 -- --
Kathleen W. Hyle............................ -- 250,000 -- --
Howard D. Schwartz.......................... -- 150,000 -- --
Mary Wood................................... -- 150,000 -- --
- ---------------
(1) None of the options were "in-the-money" as of December 31, 2000, based on
the closing price of $3.50 per share of our common stock as of December 29,
2000 as reported by the Nasdaq National Market.
(2) Mr. Karsner's options will cease vesting in June 2002, at which time 375,000
will have vested, and will expire one year thereafter if not exercised. The
remaining shares will not vest.
EMPLOYMENT AGREEMENTS
We entered into an employment agreement, dated as of June 30, 2000, with
Michael Karsner, our former chief executive officer. Mr. Karsner's employment
with the company terminated in December 2000. Pursuant to the provisions of the
agreement, we are paying Mr. Karsner $780,000 in equal monthly installments over
an eighteen month period commencing in January 2001. During the 18-month period
all options issued to him continue to vest. All of his options must be exercised
within one year after the last severance payment is made. Mr. Karsner is subject
to a covenant not to compete during the period of time he receives severance
payments.
We and Mr. Egan have agreed to enter into a 15-month employment agreement,
effective January 1, 2001, providing for his employment as our Chief Executive
Officer. Under this agreement Mr. Egan will be entitled to an annual salary of
$750,000 and will be eligible for a bonus based on the achievement of net
after-tax profit targets.
Mr. Egan will be granted options on July 3, 2001 to acquire 750,000 shares
of our common stock. The options will have an exercise price per share equal to
the fair market value per share on the date of grant. One third of the options
will vest upon grant and one third will vest on each of the first two
anniversaries of the grant date, subject to continued employment. The option has
a term of
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ten years. Mr. Egan will have up to three years after leaving our employment to
exercise vested options (one year upon departure by reason of retirement, death
or disability).
If we terminate Mr. Egan's employment without "cause" or if Mr. Egan quits
with "good reason," we will be required to pay Mr. Egan a prorated bonus for the
year of termination (assuming an annual incentive of $750,000), and his stock
options will immediately vest.
Upon the consummation of a "change in control" of our company, all of Mr.
Egan's stock options will vest. Mr. Egan will also be eligible to receive a
payment equal to 1,000,000 times the excess of the change in control price per
share over $2.53 (the closing price on March 21, 2001).
In January 2001 the compensation committee of the board of directors
approved a severance protection plan for a number of our executive officers and
key employees. The payment of benefits under the plan is triggered by the
occurrence of a change in control followed by termination of the employee within
one or two years of the change in control, other than for cause, death or
disability, or termination by the employee within one or two years of the change
in control for good reason. The severance benefit consists of two times, one
time or half of the employee's base salary, payable over 24, 12 or six months,
respectively, automatic vesting of all stock options, continued healthcare
benefits, life insurance and company car benefit for a specified period of time
and outplacement counseling for a specified period of time. Employees are
subject to noncompete and nonsolicitation covenants during the period that they
receive severance benefits. With respect to our named executive officers, the
severance benefit consists of two times base salary payable over 24 months.
In general, a change of control occurs under the severance protection plan
upon (1) the acquisition by a third party of more than 50% of the then
outstanding voting shares, (2) a non-consensual replacement of at least
two-thirds of the members of the board of directors, (3) certain mergers or
consolidations involving ANC Rental Corporation, (4) the complete liquidation or
dissolution of ANC Rental Corporation, (5) the sale to a third party of all or
substantially all of our assets, (6) the sale to a third party of Alamo or
National, or (7) the sale to a third part of the International or Alamo Local
Market divisions but only in respect of the employees of the sold division.
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COMPENSATION COMMITTEE REPORT ON
COMPENSATION OF OUR EXECUTIVE OFFICERS
Our compensation committee is responsible for executive compensation,
including setting our compensation philosophy and policies, and determining the
compensation for our executive officers. The compensation committee is also
responsible for administering our executive compensation plans and programs. The
compensation committee reviews our executive compensation program on at least an
annual basis to ensure that the program continues to meet the goals of its
compensation policy. All of the members of the compensation committee are
outside directors who have never been employees of the company or received
compensation from the company other than for their service as directors.
COMPENSATION POLICY
The compensation committee has designed our executive compensation program
(1) to attract qualified executive officers, (2) to reward, motivate and retain
our executive officers and (3) to align the interests of our executive officers
with the interests of our stockholders by linking the executives' annual cash
and long-term incentive compensation to our performance and by encouraging the
executives to purchase our common stock.
Our compensation program consists of three basic components: base salary;
annual cash incentive-based compensation; and long-term compensation in the form
of stock options. To further the compensation committee's goal of more closely
aligning our executives' interests with those of our stockholders, we
implemented a stock option plan in order to incentivize our executive officers
and other employees and we developed a share purchase program in order to
encourage our executive officers (as well as other employees) to purchase our
equity. We also provide perquisites to our executive officers in order to
maintain our competitive status in attracting and retaining executive officers
in a competitive global market.
BASE SALARY
The compensation committee reviews base salary levels of the executive
officers annually. Adjustments, if any, are made in the first quarter. A base
salary range is determined for each executive. These salary ranges have and will
be compared to salaries offered by our competitors within the industry and other
like businesses and industries from which we must recruit qualified individuals.
Each executive is positioned in their respective base salary range according to
their performance. Our 2000 executive salaries were determined by AutoNation,
our former parent, and affirmed by our compensation committee.
BONUSES
In 2000, the compensation committee provided an executive bonus opportunity
with possible bonus payouts for all executive officers, except the Chief
Executive Officer, in a range between 35% and 50% of the executive's base
salary. The bonus opportunity range provided to the Chief Executive Officer was
between 45% and 60%. The compensation committee set, as a financial measure to
determine whether there would be a bonus payout, the achievement of our net
income goal. Upon attainment of that goal and meeting certain additional
designated business unit or departmental goals, the participants would have been
entitled to receive the base bonus payout. A net income matrix was established
entitling the executive to an increasing bonus payout until the upper end of the
range was reached.
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For 2000, the Company's net income goal was not achieved and, accordingly,
no bonuses were awarded to any of the named executive officers. Two other
executive officers, however, did receive a discretionary bonus of less than 10%
of their base salary based upon their individual contributions.
STOCK OPTION PLAN
In June 2000 we adopted the ANC Rental Corporation Stock Option Plan. The
plan is designed to encourage our key employees, through their individual
efforts, to improve our overall performance and to promote profitability by
providing them with an opportunity to participate in the increased value they
help create. The persons eligible to participate in the stock option plan as
recipients of options include our employees, officers and directors. Options
granted under the plan may be in the form of "incentive stock options" as
defined under Section 422 of the Internal Revenue Code of 1986, as amended, or
options that are not incentive stock options. The plan is administered by the
compensation committee of the board of directors.
We have reserved 9.0 million shares of common stock for issuance under the
plan. In general, all options granted under the plan lapse ten years from the
date of grant, or five years in the case of incentive stock options issued to a
10% stockholder of our company, our parent or one of our subsidiaries. The
options vest generally in equal installments over four years, except the initial
grants, which vest in four equal installments from January 1, 2001 through
January 1, 2004. In general, the exercise price of an option will be determined
by the compensation committee at the time the option is granted and will not be
less than 100% of the fair market value of a share of our common stock on the
date the option is granted (110% in the case of incentive stock options issued
to a 10% shareholder of our company, our former parent or one of our
subsidiaries). The compensation committee may provide in the option agreement
that an option may be exercised in whole immediately or is exercisable in
increments. The plan will expire in January 2010.
We are currently seeking shareholder approval to amend the plan to provide
that the maximum number of options that may be granted to any one person during
any fiscal year be 1,000,000. See "Approval of an Amendment to the ANC Rental
Corporation 2000 Stock Option Plan."
EMPLOYEE STOCK PURCHASE PLAN
In June 2000 we adopted an Employee Stock Purchase Plan. The plan is
designed to encourage employee participation in the ownership of our company and
to qualify under section 423 of the Internal Revenue Code. The plan is
administered by the compensation committee of the board of directors.
We have reserved 2.0 million shares of common stock for issuance under the
plan. During 2000, eligible employees were able to purchase our common stock at
certain established times at 90% of the fair market value of the shares on the
date of purchase. During 2001, and thereafter, the board of directors will
establish the purchase price under the plan which may not be less than 85% of
fair market value. No change was made to the purchase price percentage for 2001.
EMPLOYEE BENEFIT PLANS
We have established a health and welfare benefits plan for our employees
which we have been operating under since January 2000. Additionally, we have
established a 401(k) program in which our employees can participate. Other than
highly compensated individuals, who are capped at 3% of their salaries, our
employees are permitted to contribute up to 15% of their salaries (up to a
maximum of $10,500 per year). We match, on a mandatory basis, one-half of the
first four percent of
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an employee's contribution under the plan in either cash or shares of our common
stock. The match is made at least monthly and is fully vested when made.
CEO COMPENSATION
Mr. Karsner served as Chief Executive Officer until December 28, 2000 at
which time he was replaced by Mr. Egan. In 2000 Mr. Karsner's annual base salary
was established at $520,000. Mr. Karsner's 2000 base salary was established by
AutoNation, our former parent, and affirmed by the compensation committee in
June 2000. The compensation committee approved a grant to Mr. Karsner under our
Stock Option Plan of options to purchase 750,000 shares of common stock
exercisable at $5.1875 per share. Options to purchase 187,500 shares are
presently exercisable. Pursuant to Mr. Karsner's employment agreement the
options will continue to vest through June 2002 at which time an additional
187,5000 shares will have vested.
For 2000, Mr. Egan received no compensation for his services as Chief
Executive Officer.
SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a deduction to any publicly-held corporation for compensation paid in
excess of $1 million in a taxable year to its chief executive officer or any of
the four other most highly-compensated executive officers employed by the
corporation on the last day of its taxable year.
The compensation committee has structured our executive compensation
program with the intent that compensation paid to our executive officers will
not be subject to the deduction limitation of Section 162(m).
Respectfully submitted,
John O. Grettenberger, Sr. (Chair)
Gordon M. Bethune
William N. Plamondon, III
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AUDIT COMMITTEE REPORT
The audit committee of the board of directors is composed of three
independent directors and operates under a written charter adopted by the board
of directors. The audit committee charter is attached to this proxy statement as
Exhibit A. The members of the committee are J.P. Bryan, John O. Grettenberger,
Sr. and William N. Plamondon, III. The committee recommends to the board of
directors, subject to stockholder ratification, the selection of the company's
independent accountants.
Management is responsible for the company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the company's consolidated financial
statements in accordance with generally accepted auditing standards and to issue
a report thereon. The committee's responsibility is to monitor and oversee these
processes.
In this context, the audit committee has met and held discussions with
management and the independent accountants. Management represented to the
committee that the company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles, and the audit
committee has reviewed and discussed the consolidated financial statements with
management and the independent accountants. The committee discussed with the
independent accountants matters required to be discussed by Statement of
Auditing Standards No. 61 (Communication with Audit Committees).
The company's independent accountants also provided to the audit committee
the written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the audit committee
discussed with the independent accountants that firm's independence.
Based upon the audit committee's discussion with management and the
independent accountants and the audit committee's review of the representation
of management and the report of the independent accountants to the committee,
the audit committee recommended that the board of directors include the audited
consolidated financial statements in the company's annual report on Form 10-K
for the year ended December 31, 2000 filed with the Securities and Exchange
Commission.
Respectfully Submitted,
William N. Plamondon, III (Chair)
J.P. Bryan
John O. Grettenberger, Sr.
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PERFORMANCE GRAPH
The following graph compares the cumulative total return on $100 invested
on July 3, 2000 in the common stock of ANC Rental Corporation; the Standard &
Poors Small Cap 600 Index, which tracks performance of companies with a market
capitalization generally ranging from $300 million to $400 million; and the
Russell 2000 Index, which tracks performance of the smallest companies in the
Russell 3000 Index with an average market capitalization of $580 million. The
returns are calculated assuming reinvestment of dividends. We have not paid any
dividends. Because of the small number of publicly traded companies in our peer
group, we do not believe we can reasonably identify a group of peer issuers. The
graph covers the period from July 3, 2000, when our common stock first began
regular way trading on the Nasdaq National Market, through December 29, 2000.
The stock price performance shown on the graph below is not necessarily
indicative of future price performance.
ANC RENTAL CORPORATION S & P SMALL CAP 600 INDEX RUSSELL 2000 INDEX
---------------------- ------------------------- ------------------
7/3/2000 $ 100 $ 100 $ 100
12/29/2000 $ 70 $ 103 $ 92
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RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH AUTONATION
AutoNation distributed all of our common stock to its shareholders as of
June 30, 2000. Our relationship with AutoNation since the spin-off has been
governed by a separation and distribution agreement and other agreements entered
into in June 2000 in connection with the spin-off. The material provisions of
these agreements are described below. H. Wayne Huizenga and J.P. Bryan are
directors of both our company and AutoNation.
SEPARATION AND DISTRIBUTION AGREEMENT
Before the spin-off we entered into a separation and distribution agreement
with AutoNation. This agreement set forth the agreements between the parties
with respect to the principal corporate transactions required to effect the
separation of our automotive rental business from AutoNation's automotive retail
business and also contained other agreements governing our relationship with
AutoNation after the spin-off.
In conjunction with the spin-off, AutoNation separated its existing
businesses so that after the spin-off, (1) the assets and liabilities of its
automotive rental and related businesses were owned by us and (2) the assets and
liabilities of its automotive retail and related businesses were owned by
AutoNation or its subsidiaries. Specifically, our assets and liabilities upon
completion of the separation consisted of (a) those assets and liabilities
related to AutoNation's automotive rental business, (b) those assets acquired
and liabilities incurred or accrued after March 31, 2000 and (c) all other
assets, rights and liabilities expressly allocated to the company or its
subsidiaries under the distribution agreement or any ancillary agreements.
The distribution agreement provided that, subject to the terms and
conditions of the agreement, the IRS letter ruling and the facts and
representations submitted to the IRS, both ANC Rental Corporation and AutoNation
would take all reasonable steps necessary and appropriate to cause all
conditions to the spin-off to be satisfied and then to effect the spin-off. We
agreed with AutoNation that neither of us would take, or permit any of our
respective affiliates to take, any action which reasonably could be expected to
prevent the spin-off from qualifying as a tax-free distribution to AutoNation or
its stockholders or which would be inconsistent with any representation of fact
or submission made in connection with or in the IRS letter ruling. We also
agreed with AutoNation to take any reasonable actions necessary for the spin-off
to qualify as a tax-free distribution to AutoNation and its stockholders.
The distribution agreement provides for a full and complete release and
discharge of all liabilities (including any contractual agreements or
arrangements existing or alleged to exist) existing or arising from all acts and
events occurring or failing to occur or alleged to have occurred or to have
failed to occur and all conditions existing or alleged to have existed on or
before June 30, 2000 between us and AutoNation, including in connection with the
transactions and all other activities to implement the spin-off, except as
described in the agreement.
Except as provided in the distribution agreement, we agreed to indemnify,
defend and hold harmless AutoNation and each of its directors, officers and
employees from and against all liabilities relating to, arising out of or
resulting from (1) our failure or the failure of any other person to pay,
perform or otherwise promptly discharge any of our liabilities in accordance
with their respective terms, (2) matters relating to our automotive rental
businesses and our liabilities and contracts, (3) any breach by us of the
distribution agreement or any of the ancillary agreements entered into by the
parties in connection with the spin-off and (4) any untrue statement of a
material fact or
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omission to state a material fact, or alleged untrue statements or omissions,
with respect to information relating to us contained in the registration
statement filed in connection with the spin-off.
Subject to exceptions provided in the distribution agreement, AutoNation
agreed to indemnify, defend and hold us and each of our directors, officers and
employees harmless from and against all liabilities relating to, arising out of
or resulting from (1) AutoNation's failure or the failure of any other person to
pay, perform or otherwise promptly discharge any liabilities of AutoNation other
than our liabilities, (2) matters relating to AutoNation's automotive retail and
related businesses and its liabilities and contracts, (3) any breach by
AutoNation of the distribution agreement or any of the other related agreements
and (4) any untrue statement of a material fact or omission to state a material
fact, or alleged untrue statements or omissions, with respect to information
relating to AutoNation contained in the registration statement filed in
connection with the spin-off. The distribution agreement describes specific
procedures with respect to claims subject to indemnification and related
matters.
The distribution agreement provides for indemnification by us and
AutoNation with respect to contingent liabilities primarily relating to our
respective businesses or otherwise assigned to one of us. The distribution
agreement provides for the establishment of a contingent claims committee
comprised of one representative designated from time to time by each of
AutoNation and us that will establish procedures for resolving disagreements
between us and AutoNation as to contingent gains and contingent liabilities.
The distribution agreement provides for the sharing of some contingent
liabilities. We and AutoNation agreed to allocate responsibility for any shared
contingent liability equally between the two companies, or upon another
methodology which the contingent claims committee may establish. AutoNation will
assume the defense of, and may seek to settle or compromise, any third party
claim that is a shared contingent liability, and the costs and expenses of this
action will be included in the amount to be shared by the parties.
The distribution agreement provides that we and AutoNation will have the
exclusive right to any benefit received with respect to any contingent gain that
primarily relates to the business of, or that is expressly assigned to, ANC
Rental Corporation or AutoNation. Each of ANC Rental Corporation and AutoNation
will have sole and exclusive authority to manage, control and otherwise
determine all matters whatsoever with respect to this type of contingent gain
that primarily relates to its respective business. We agreed with AutoNation to
share any benefit that may be received from any contingent gain that is not
related to the business of, or that is not expressly assigned to either of us,
equally between the two companies, or upon another methodology to be established
by the contingent claims committee. AutoNation will have the sole and exclusive
authority to manage, control and otherwise determine all matters whatsoever with
respect to any shared contingent gain; and AutoNation may elect not to pursue
any shared contingent gain for any reason whatsoever, including a different
assessment of the merits of any action, claim or right or any business reasons
that are in the best interests of AutoNation without regard to our best
interests, and that AutoNation will have no liability to any person as a result
of any determination of this kind.
TRANSITIONAL SERVICES AGREEMENT WITH AUTONATION
We entered into a transitional services agreement with AutoNation on June
30, 2000. The services agreement has an initial term expiring on June 30, 2001.
During the term of the services agreement either we or AutoNation may reduce or
completely eliminate the amount of services obtained from the other party and,
consequently, the monthly fees payable under the services agreement would be
adjusted to mutually acceptable terms. At the end of the one-year term, if the
parties have not terminated the agreement earlier, either party may renew or
extend the term of the
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agreement with respect to the provision of any services that have not previously
been terminated on terms mutually acceptable to the parties. During 2000 we paid
AutoNation approximately $645,000 under this agreement. During 2000, AutoNation
paid us approximately $183,000 under this agreement. We believe that the fees we
pay and receive for these services are no less favorable to us than we could
obtain from unaffiliated third parties.
TAX SHARING AGREEMENT WITH AUTONATION
We entered into a tax sharing agreement with AutoNation on June 30, 2000.
The primary purpose of the agreement is to reflect each party's rights and
obligations relating to payments and refunds of taxes that are attributable to
periods beginning before and including June 30, 2000 and any taxes resulting
from transactions effected in connection with the spin-off. The agreement also
covers the handling of audits, settlements, elections, accounting methods and
return filings in cases where both companies have an interest in the results of
these activities. With respect to any period ending on or before the spin-off or
any tax period in which the spin-off occurs, AutoNation will:
- continue to be the sole and exclusive agent for us in all matters
relating to the income, franchise, property, sales and use tax
liabilities of ANC Rental Corporation,
- bear any costs relating to tax audits, including tax assessments and any
related interest and penalties and any legal, litigation, accounting or
consulting expenses, subject to our obligation to pay for items relating
to our rental business,
- continue to have the sole and exclusive responsibility for the
preparation and filing of consolidated federal and consolidated or
combined state income tax returns, and
- generally have the powers, in AutoNation's sole discretion, to contest or
compromise any claim or refund on our behalf.
Even if the spin-off qualifies as a tax-free distribution to AutoNation
stockholders, a corporate tax could also be payable in accordance with Section
355(e) if, during the four-year period beginning two years before the spin-off,
one or more persons acquire 50% or more, by vote or value, of the capital stock
of AutoNation or ANC Rental Corporation as part of a plan or series of related
transactions that include the spin-off (a "change in control"). There is a
presumption that any stock acquisition or issuance that occurs within two years
before or after the spin-off is part of a plan related to the spin-off. If this
change-in-control occurs, and AutoNation or ANC Rental Corporation are unable to
disprove or rebut the presumption, AutoNation would recognize gain, if any, on
the shares of our common stock that it distributed in the spin-off.
To minimize the risk of a tax due to a change in control and other risks,
we have agreed with AutoNation to refrain from engaging in specified
transactions unless we receive AutoNation's prior consent or we receive:
- a ruling from the IRS to the effect that the proposed transaction will
not result in the spin-off being taxable to AutoNation or its
stockholders, or
- an opinion of counsel recognized as an expert in federal income tax
matters and designated by AutoNation to the same effect and is
satisfactory to AutoNation in its absolute discretion.
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Transactions that may be affected by these restrictions relating to an
acquisition of a 50% or greater interest and other restrictions required to
preserve the tax-free nature of the spin-off include, among others:
- a liquidation;
- a merger or consolidation with, or acquisition by, another company;
- issuances and redemptions of shares of our common stock;
- the exercise of stock options;
- the sale, distribution or other disposition of assets in a manner that
would adversely affect the tax consequences of the spin-off; and
- the discontinuation of material businesses.
In addition, other transactions could also jeopardize the tax-free nature of the
spin-off.
The tax sharing agreement allocates responsibility for the possible
corporate-level tax burden resulting from the spin-off, as well as other tax
items. If the spin-off is taxable under Section 355(e) of the Code as a result
of a change in control, then the resulting corporate-level tax burden will be
borne by that entity, either we or AutoNation, with respect to which the change
in control has occurred. Similarly, if the spin-off is taxable due to any other
action taken by us or AutoNation that is inconsistent with the factual
representations on which the IRS private letter ruling is based, the entity
taking that action will be responsible for the resulting corporate-level tax
liability. Any corporate-level income tax liability that results from the
spin-off, but which is not due to either a change in control or any action taken
by either company that is inconsistent with the IRS private letter ruling, will
be shared equally by us and AutoNation.
LEASES WITH AUTONATION
Before the spin-off we, as the tenant, entered into two leases with
AutoNation or an affiliate of AutoNation: (1) a lease for approximately 161,000
square feet of office space to serve as our corporate headquarters and (2) a
lease for approximately 31,600 square feet of computer data center space at
AutoNation's data center. Both properties are located in Fort Lauderdale,
Florida.
Payments due under the lease for the corporate headquarters total
approximately $1,609,000 (for the year), or approximately $12.00 per square
foot, for a 10 year term. In addition, we pay operating expenses, real estate
taxes, insurance and utilities relating to the facility. We have an option to
extend the term for two additional periods of five years each. The lease
payments will be increased on the fifth and eighth anniversary of the start of
the lease. Increases in lease payments will be based on increases in the
Consumer Price Index. In no event will the adjusted lease payment for the fifth
year be lower than the initial rate or more than 15% higher. In no event will
the adjusted lease payment for the eighth year be lower than the seventh year or
more than 9% higher. During the fourth quarter of 2000 AutoNation transferred
ownership in this property to an unrelated third party.
Payments due under the lease for the computer data center space total
approximately $869,000 (per year) or approximately $27.45 per square foot, which
includes our proportionate share of the operating expenses, real estate taxes,
insurance and utilities of the facility. The lease has an initial term of two
years, with an option to extend the term for an additional two years. If
extended, the lease payments will be increased based on increases in the
Consumer Price Index. In no event will the adjusted lease payment be more than
6% higher than the initial lease payment.
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We believe that the lease payments reflect fair market value and that the
terms of the leases are no less favorable than could be obtained from persons
unrelated to us.
REIMBURSEMENT AGREEMENT WITH AUTONATION
Before the spin-off from AutoNation, AutoNation had provided guarantees in
support of our debt financing. Pursuant to a reimbursement agreement entered
into with AutoNation before the distribution date, some of this credit support
remains in place following the spin-off. In particular, AutoNation continues to
guarantee certain annual rent expense in connection with various real estate
lease obligations and a vehicle lease. We will have reimbursement obligations to
AutoNation to the extent AutoNation is required to satisfy any of its guarantees
of any of its obligations. These reimbursement obligations are payable upon
AutoNation's demand, except in the event that certain of our loans and credit
facilities remain in effect as of the date of AutoNation's demand. In that
event, the amount of our obligations to AutoNation will be converted to a loan
maturing 91 days after the date that all loans under those facilities are paid
in full, but not later than September 29, 2003. Each reimbursement obligation or
loan payable by us to AutoNation under that reimbursement agreement will bear
interest at an annual rate up to 18%. We have paid, and will pay, AutoNation a
fee for the anticipated amount of its credit support in an aggregate amount of
approximately $343,000 in 2000 and up to approximately $1.0 million in 2001.
OTHER AGREEMENTS WITH AUTONATION
After the spin-off from AutoNation, we entered into three year contracts
with AutoNation pursuant to which we (1) purchase a substantial portion of our
vehicles from certain dealerships owned by AutoNation, (2) purchase a portion of
our parts at a negotiated market rate from certain dealerships owned by
AutoNation and (3) have the right to operate replacement car rental businesses
at certain dealerships owned by AutoNation. We also have corporate car rental
contracts with AutoNation and some of its subsidiaries. Amounts charged and paid
under these contracts and arrangements are consistent with amounts charged to
and paid by unaffiliated customers and suppliers.
The total dollar volume related to the above discussed transactions and
paid to AutoNation for the year ended December 31, 2000 is as follows: (1)
dealer mark-up of approximately $1.5 million was paid on vehicle purchases of
approximately $3.2 billion or less than one percent of acquisition cost; (2)
parts purchases approximated $7.5 million; and (3) rent paid for replacement car
rental sites approximated $300,000. Vehicle rental payments we received from
AutoNation approximated $225,000.
OTHER RELATED PARTY TRANSACTIONS
In September 1998, National entered into an agreement to purchase the
naming rights to the Broward County Arena for $2.2 million per year. The Arena
is owned by Boca Resorts, Inc. Mr. Egan is a director of Boca Resorts, and Mr.
Huizenga is the Chairman of the Board of Boca Resorts. In addition, Mr. Huizenga
beneficially owns approximately 17.9% of Boca Resorts' outstanding stock and
controls a majority of its voting interests. The Arena agreement has a term of
ten years and provides that the fees will increase at a rate of 3.0% a year.
During the year 2000 we paid Boca Resorts, Inc. approximately $318,000 for team
sponsorship and $135,000 for use of facilities. During 2000, we utilized some of
the hotel facilities owned by Boca Resorts. The amounts paid for the use of
these facilities were at market rates and, in the aggregate, were not material
to us.
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Mr. Egan has a beneficial ownership interest in Certified Vacations, Inc.,
a domestic tour operator that has conducted business with us. Mr. Egan also
serves as Certified Vacations' Chairman and Chief Executive Officer. Total gross
revenue recognized by us from Certified Vacations was approximately $8.7 million
for the year ended December 31, 2000. In addition, we incurred marketing expense
of approximately $301,000 to Certified Vacations during 2000. Additionally,
during 2000, Certified Vacations, similar to most large tour operators, had use
of six vehicles at little or no cost to them. Vehicle expense, primarily
comprised of depreciation, related to these units approximated $37,000.
It is our policy that transactions with related parties must be on terms
that, on the whole, are no less favorable than those that would be available
from unrelated parties. Based on our experience in the industries in which we
operate and the terms of our transactions with unrelated parties, it is our
belief that all of the transactions described above met that standard at the
time the transactions were effected.
APPROVAL OF AN AMENDMENT TO THE
ANC RENTAL CORPORATION
2000 STOCK OPTION PLAN
Our stockholders are being asked to approve an amendment to the ANC Rental
Corporation 2000 Stock Option Plan to provide that the maximum number of shares
of common stock subject to options that may be granted to any person during any
fiscal year be 1,000,000. The plan currently provides that the maximum number of
shares subject to options that may be granted to any person during any
twelve-month period is 750,000. The purpose of the amendment is to provide the
committee greater flexibility with regard to the amount and timing of option
grants. The amendment is attached to this proxy statement as Exhibit B.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AMENDMENT TO THE STOCK
OPTION PLAN AND RECOMMENDS A VOTE FOR THE AMENDMENT.
SUMMARY OF THE PLAN
Following are summaries of the principal provisions and the principal
federal income tax consequences of the stock option plan. The following summary
of the stock option plan is qualified in its entirety by reference to the full
text of the stock option plan which is attached as Exhibit B to this proxy
statement.
PURPOSE. The stock option plan was originally adopted on June 28, 2000. It
provides for granting stock options to employees, officers and directors of ANC
Rental Corporation or our subsidiaries. The purpose of the stock option plan is
to encourage ownership of our common stock by employees, officers and directors
of our company and our subsidiaries and to provide increased incentives for
these individuals to render services and to exert maximum effort for our
business success. Options granted under the stock option plan may be incentive
stock options, or ISOs, or non-qualified stock options.
ADMINISTRATION OF THE PLAN. The stock option plan is administered by the
compensation committee of our board of directors. The compensation committee
will consist of not less than two
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members of the board, none of whom is an officer or other salaried employee of
our company, and each of whom qualifies as an "outside director" for purposes of
Section 162(m) of the Code and a "non-employee director" for purposes of Rule
16b-3 under the Securities Exchange Act of 1934, as amended. The compensation
committee may act by majority vote of its members.
STOCK RESERVED FOR THE STOCK OPTION PLAN. The aggregate number of shares
of common stock that may be issued under the stock option plan is 9,000,000. The
closing price per share of the common stock on March 16, 2001 was $2.56. If any
option expires or is cancelled prior to its exercise in full, the shares subject
to that option may again be made subject to an option under the stock option
plan.
ELIGIBILITY. Employees, officers and directors of our company or any
parent or subsidiary of our company are eligible to participate in the stock
option plan. There are approximately 120 individuals eligible to receive grants
under the stock option plan.
GRANT OF OPTIONS. The compensation committee has discretionary authority
(1) to determine, authorize, and designate the individuals who receive options
under the stock option plan and (2) to determine the number of shares to be
covered by such options and the terms of the options. The committee has
discretionary authority to prescribe, amend and rescind rules and regulations
relating to the stock option plan, to interpret the stock option plan, to
prescribe and amend the terms of the option agreements and to make all other
determinations it deems necessary or advisable for the administration of the
stock option plan. Currently, the maximum number of shares of common stock
subject to options granted to any person during any twelve-month period is
750,000. Upon approval of the proposed amendment by our stockholders, the
maximum number of shares of common stock subject to options granted to any
person during any fiscal year will be 1,000,000.
OPTION PERIOD. Each option agreement will specify the period for which the
option is granted, which in no event will exceed ten years from the date of
grant, and will provide that the option will expire at the end of that period.
However, in the case of an option intended to qualify as an ISO granted to an
individual who, at the time of grant, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of our company or its parent
or its subsidiary ("Ten Percent Stockholder"), the period may not exceed five
years from the date of grant.
OPTION PRICE. The purchase price of each share of common stock subject to
each option granted pursuant to the stock option plan will be determined by the
committee at the time the option is granted and will not be less than 100% of
the fair market value of a share of common stock on the date the option is
granted, as determined by the committee. In the case of an option granted to a
Ten Percent Stockholder that is intended to qualify as an ISO, the option price
will not be less than 110% of the fair market value of a share of common stock
on the date the option is granted.
EXERCISE PERIOD. The committee may provide in the option agreement that an
option may be exercised in whole immediately or is to be exercisable in
increments. However, if the option is intended to qualify as an ISO, no portion
of the option may be exercisable to the extent that the aggregate fair market
value of common stock with respect to which the option first becomes exercisable
exceeds $100,000.
PROCEDURES FOR EXERCISE. Options will be exercised by the delivery of
written notice to the stock option administrator describing the number of shares
with respect to which the option is being exercised. The exercise price may be
paid (1) in cash; (2) through the tender to us of shares of common stock, which
shares will be valued at their fair market value on the date of exercise; (3)
pursuant to a "cashless" exercise/sale procedure (pursuant to which funds to pay
for exercise of the option are delivered to us by a broker upon receipt of stock
certificates from us) or a cashless exercise/loan procedure (pursuant to which
the optionee would obtain a margin loan from a broker to
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fund the exercise) through a licensed broker acceptable to us whereby the stock
certificate or certificates for the shares of common stock for which the option
is exercised will be delivered to such broker as the agent for the individual
exercising the option and the broker will deliver to us cash (or cash
equivalents acceptable to us) equal to the exercise price for the shares of
common stock purchased pursuant to the exercise of the option; (4) to the extent
provided by the option agreement with respect to such option, by the delivery of
a promissory note; or (5) by a combination of these methods. The optionee must
also satisfy any tax obligations through delivery of cash, common stock or
withholding of shares of common stock by us.
TERMINATION OF EMPLOYMENT. If an optionee ceases to be an employee,
officer or director of our company or one of our subsidiaries for any reason
other than retirement, death or disability, any option or part of an option
which is exercisable on the date of his or her termination may be exercised only
during the 60-day period beginning on that date (or any longer period which the
committee in its sole discretion may determine). If our company or one of our
subsidiaries terminates the optionee for reasons other than "cause," an option
may be exercised during the six-month period beginning with the optionee's
termination date. If an optionee is terminated for "cause," then any unexercised
option will expire upon his or her termination. In no event may the option be
exercised after its expiration under the terms of the option agreement.
RETIREMENT, DISABILITY OR DEATH OF OPTIONEE. In the event of retirement,
disability or upon the death of an optionee while he or she is an employee,
officer or director of our company, the options previously granted to him or her
may be exercised (whether or not he or she would have been entitled to do so at
the date of his or her retirement, disability or death) at any time within a
twelve-month period after his or her retirement, disability or death, but in no
event after their expiration under the terms of the option agreement.
ACCELERATION OF OPTIONS. The committee, in its sole discretion, may
accelerate the vesting schedule of any option granted under the stock option
plan.
TRANSFERABILITY. Options granted under the stock option plan are not
assignable or otherwise transferable except by will or by the laws of descent
and distribution.
NO ADDITIONAL RIGHTS. No optionee will have any rights as a stockholder
with respect to shares covered by an option until shares are delivered to the
optionee. Nothing in the stock option plan or as a result of any option granted
pursuant to the stock option plan will give any individual any right to continue
to be employed by our company or interfere in any way with our right to
terminate an individual's employment at any time.
EXTRAORDINARY CORPORATE TRANSACTIONS. New option rights may be substituted
for the option rights granted under the stock option plan, or our duties as to
options outstanding under the stock option plan may be assumed, by an employer
corporation other than us, or by a parent or subsidiary of our company or such
employer corporation, in connection with any merger, consolidation, acquisition,
separation, reorganization, liquidation or like occurrence in which we are
involved, so long as the substitution or assumption will allow any incentive
stock options to continue to qualify as such. In the event such employer
corporation, or parent or subsidiary of our company or such employer corporation
does not substitute new option rights for, and substantially equivalent in terms
and economic value to, the option rights granted under the stock option plan, or
assume the option rights granted under the stock option plan, the option rights
granted will terminate and become null and void upon a "change in control."
However, each optionee will have the right in connection with the dissolution,
liquidation, merger, consolidation, acquisition or transfer, to exercise any
unexercised option rights granted under the stock option plan, whether they were
already exercisable at the time or not, so that the optionee may participate as
a holder of common stock in the transaction if he or
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she so chooses. We will give each optionee at least twenty days' prior written
notice of any event or transaction of the nature described in the preceding
sentence.
CHANGES IN OUR CAPITAL STRUCTURE. If the outstanding shares of common
stock or other securities of our company, or both, for which the option is
exercisable are at any time changed or exchanged by declaration of a stock
dividend, stock split, combination of shares, recapitalization or
reorganization, the number and kind of shares of common stock or other
securities which are subject to the stock option plan or subject to any options
granted under the stock option plan, and the option prices, will be
appropriately and equitably adjusted so as to maintain the proportionate number
of shares or other securities without changing the aggregate option price.
AMENDMENT OR TERMINATION. The board may amend, alter or discontinue the
stock option plan, but no amendment or alteration will be made which would
impair the rights of any participant, without his consent, under any option
granted under the stock option plan. Without approval of the shareholders, no
amendment may increase the total number of shares reserved under the stock
option plan, materially increase the benefits to participants or materially
modify the requirements as to eligibility for participation in the stock option
plan.
EXPIRATION OF PLAN. The stock option plan will expire ten years after the
date the board approves it and after the expiration no option will be granted
pursuant to the stock option plan.
CERTAIN PLAN BENEFITS
As described above, the selection of eligible participants who will receive
awards under the stock option plan and the size and terms of the awards is to be
determined by the committee in its sole discretion. The committee has not
determined to make grants under the amended stock option plan that would not
have been permitted under the plan absent its proposed amendment.
CERTAIN FEDERAL INCOME CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences of stock options under the stock option plan based upon current
federal income tax laws. The stock option plan is not qualified under Section
401(a) of the Code. The summary is not intended to be comprehensive and, among
other things, does not describe state, local or foreign tax consequences.
STOCK OPTIONS. Generally, an optionee will not recognize taxable income at
the time of grant of a nonqualified option. Upon exercise of the option, the
difference between the fair market value of the shares on the date of exercise
and the exercise price will be taxable as ordinary income to the optionee. If
such amount is included in income or our company satisfies applicable reporting
requirements, we will receive a commensurate tax deduction at the time of
exercise.
Generally, an optionee will not recognize taxable income at the time of
grant or exercise of an incentive stock option, and our company will not be
entitled to a tax deduction with respect to such grant or exercise. However,
upon exercise, the difference between the fair market value of the shares and
the exercise price is an item of tax preference subject to the possible
application of the alternative minimum tax.
Generally, if an optionee holds shares acquired upon the exercise of an
incentive stock option for at least one year after the date of exercise and for
at least two years after the date of grant upon disposition of such shares by
the optionee, the difference, if any, between the sales price of the shares and
the exercise price will be treated as long-term capital gain or loss to the
optionee. Upon a sale or other disposition of shares acquired upon the exercise
of an incentive stock option within one year after the transfer of the shares to
the optionee or within two years after the date of grant the excess
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of (a) the lesser of (i) the fair market value of the shares at the time of
exercise of the option and (ii) the amount realized on such disqualifying sale
or other disposition of the shares over (b) the exercise price of such shares,
should constitute ordinary income to the optionee and the Company should be
entitled to a deduction in the amount of such income. The excess if any, of the
amount realized on a disqualifying sale over the fair market value of the shares
at the time of the exercise generally will constitute short-term or long-term
capital gain, depending on whether the shares have been held for at least twelve
months after the date of exercise.
If an option is exercised through the use of shares previously owned by the
optionee, such exercise generally will not be considered a taxable disposition
of the previously-owned shares and thus no gain or loss will be recognized with
respect to such shares upon such exercise. However, if an incentive stock option
is exercised through the use of previously-owned shares that were acquired upon
the exercise of an incentive stock option, and the holding period requirement
for those shares is not satisfied at the time they are used to exercise the
option, such use will constitute a disqualifying disposition of the
previously-owned shares resulting in the recognition of ordinary income in the
amount described above with respect to disqualifying dispositions.
SECTION 280G OF THE CODE. Under certain circumstances, the accelerated
vesting or exercise of options in connection with a change of control of our
company might be deemed an "excess parachute payment" for purposes of the golden
parachute tax provisions of Section 280G of the Code. To the extent it is so
considered, the optionee may be subject to a 20% excise tax and we may be denied
a tax deduction.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THIS PROPOSAL.
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The board of directors, upon the recommendation of the audit committee, has
appointed Arthur Andersen LLP, Fort Lauderdale, Florida, as the firm of
independent public accountants to audit our books and accounts for the fiscal
year ending December 31, 2001. Although the appointment of independent public
accountants is not required by law or our by-laws to be approved by our
stockholders, the board of directors believes that stockholders should
participate in the selection of our independent public accountants. Accordingly,
the stockholders will be asked at the annual meeting to ratify the appointment
by the board of directors of Arthur Andersen LLP as our independent public
accountants for the fiscal year ending December 31, 2001. In the event the
stockholders do not approve the appointment of Arthur Anderson LLP, the
selection of other independent accountants will be considered by the board of
directors. A representative of Arthur Andersen LLP will be in attendance at the
annual meeting, will have an opportunity to make a statement if such
representative desires to do so, and will be available to respond to appropriate
questions.
AUDIT FEES. The aggregate fees billed by Arthur Andersen LLP for
professional services rendered for the audit of our annual financial statements
for fiscal 2000 and the reviews of the financial statements included in our
Forms 10-Q was $712,000.
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ALL OTHER FEES. The company paid the following fees for services by Arthur
Andersen LLP during fiscal 2000:
Tax return preparation and tax advisory services............ $549,000
Airport concession audits................................... 164,000
Statutory audits of foreign subsidiaries.................... 160,000
International billing process review........................ 75,000
Internal audit assistance................................... 40,000
--------
Total............................................. $988,000
========
The audit committee reviewed these services and determined that the nature
of these engagements did not impair auditor independence.
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STOCKHOLDERS' PROPOSALS FOR THE
2001 ANNUAL MEETING OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the 2001 annual
meeting of stockholders must be received at our principal offices, 200 South
Andrews Avenue, Fort Lauderdale, Florida 33301, Attention: Secretary, for
inclusion in our proxy statement and form of proxy relating to that annual
meeting no later than January 15, 2002. Proposals, as well as any questions
related thereto, should be submitted in writing to our Secretary. Proposals may
be included in the proxy statement for the 2001 annual meeting if they comply
with certain rules and regulations promulgated by the U.S. Securities and
Exchange Commission and with certain procedures described in our by-laws, a copy
of which may be obtained from our Secretary.
In addition, if you intend to nominate a candidate for director at the
annual meeting or to introduce any other matter (aside from a shareholder
proposal under Rule 14a-8 of the SEC's proxy rules), you must give us written
notice. Such notice must be received by the Secretary of ANC Rental Corporation
not more than 120 days and not less than 90 days before the date of the 2000
annual meeting. For the 2001 annual meeting, such notice must be received
between January 15, 2002 and February 12, 2002.
EXPENSES OF SOLICITATION
The solicitation of proxies in the form enclosed is made on behalf of the
board of directors of ANC Rental Corporation. All expenses relating to the
solicitation will be borne by ANC Rental Corporation. In addition to the
solicitation of proxies by use of the mails, some of our officers, directors and
regular employees, none of whom will receive additional compensation for such
services, may solicit proxies in person or by telephone, telegraph or other
means. The Company has retained Corporate Investor Communications Inc. (CIC) to
assist with the solicitation of proxies for a fee not to exceed $5,500, plus
reimbursement for out of pocket expenses. As is customary, we will, upon
request, reimburse brokerage firms, banks, trustees, nominees and other persons
for their out-of-pocket expenses in forwarding proxy materials to their
principals.
OTHER MATTERS
The persons named in the enclosed form of proxy have no intention of
bringing before the meeting for action any matter other than as specifically
referred to above, nor has management or the board of directors any such
intention, and none of such persons, management or the board of directors is
aware of any matters which may be presented by others. If any such business
should properly come before the meeting, the persons named in the form of proxy
intend to vote thereon in accordance with their best judgment.
Delaware law requires that a list of all stockholders entitled to vote at
the 2000 annual meeting be available for examination. Such a list will be
available for inspection during normal business hours at the office of ANC
Rental Corporation for ten days before the meeting and during the annual
meeting.
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SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Our directors, executive officers and ten percent stockholders are required
to file reports of their ownership of our common stock with the Securities and
Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of
1934. To our knowledge, based solely on a review of the copies of such reports
furnished to us and written representations that no other reports were required,
all of such reporting requirements were satisfied during fiscal 2000.
WE WILL FURNISH, WITHOUT CHARGE, TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON WRITTEN REQUEST, A COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2000, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES BUT EXCLUDING EXHIBITS). COPIES OF ANY EXHIBITS THERETO ALSO WILL BE
FURNISHED UPON THE PAYMENT OF A REASONABLE DUPLICATING CHARGE. REQUESTS IN
WRITING FOR COPIES OF ANY SUCH MATERIALS SHOULD BE DIRECTED TO ANC RENTAL
CORPORATION, 200 SOUTH ANDREWS AVENUE, FORT LAUDERDALE, FLORIDA 33301,
ATTENTION: INVESTOR RELATIONS.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO DATE, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
By order of the Board of Directors,
Howard D. Schwartz
Senior Vice President, Secretary and
General Counsel
Fort Lauderdale, Florida
April 2, 2001
A copy of our annual report for the fiscal year ended December 31, 2000,
including financial statements, accompanies this proxy statement. The annual
report is not to be regarded as proxy soliciting material or as a communication
by means of which any solicitation is to be made.
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EXHIBIT A
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board to assist the Board in
monitoring (1) the integrity of the financial statements of the Company, (2) the
compliance by the Company with legal and regulatory requirements and (3) the
independence and performance of the Company's internal and external auditors.
The members of the Audit Committee shall meet the independence and
experience requirements of the Nasdaq Stock Market, Inc. The members of the
Audit Committee shall be appointed by the Board.
The Audit Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Audit Committee may
request any officer or employee of the Company or the Company's outside counsel
or independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review the annual audited financial statements with management,
including major issues regarding accounting and auditing principles and
practices as well as the adequacy of internal controls that could significantly
affect the Company's financial statements.
3. Review an analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements.
4. Review with management and the independent auditor the Company's
quarterly financial statements prior to the filing of its Form 10-Q.
5. Meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to monitor and
control such exposures.
6. Review major changes to the Company's auditing and accounting principles
and practices as suggested by the independent auditor, internal auditors or
management.
7. Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board.
8. Approve the fees to be paid to the independent auditor regarding the
auditor's independence consistent with Independence Standards Board Standard 1,
discuss such reports with the auditor, and if so determined by the Audit
Committee, take or recommend that the full Board take appropriate action to
oversee the independence of the auditor.
9. Receive periodic reports from the independent auditor regarding the
auditor's independence consistent with Independence Standards Board Standard 1,
discuss such reports with the auditor, and if so determined by the Audit
Committee, take or recommend that the full Board take appropriate action to
oversee the independence of the auditor.
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10. Evaluate together with the Board the performance of the independent
auditor and, if so determined by the Audit Committee, recommend that the Board
replace the independent auditor.
11. Review the appointment and replacement of the senior internal auditing
executive.
12. Review the significant reports to management prepared by the internal
auditing department and management's responses.
13. Meet with the independent auditor prior to the audit to review the
planning and staffing of the audit.
14. Obtain from the independent auditor assurance that Section 10A of the
Securities Exchange Act of 1934 has not been implicated.
15. Obtain reports from management, the Company's senior internal auditing
executive and the independent auditor that the Company's subsidiary/foreign
affiliated entities are in conformity with applicable legal requirements and the
Company's Code of Conduct.
16. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the conduct of
the audit.
17. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the auditor
and the Company's response to that letter. Such review should include:
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to required
information.
(b) Any changes required in the planned scope of the internal audit.
(c) The internal audit department responsibilities, budget and
staffing.
18. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
19. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with the Company's
Code of Conduct.
20. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance policies
and any material reports or inquiries received from regulators or governmental
agencies.
21. Meet at least annually with the chief financial officer, the senior
internal auditing executive and the independent auditor in separate executive
sessions.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's Code of Conduct.
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EXHIBIT B
FIRST AMENDMENT TO THE
ANC RENTAL CORPORATION
2000 STOCK OPTION PLAN
WHEREAS, ANC Rental Corporation (the "Company") has established the ANC
Rental Corporation 2000 Stock Option Plan (the "Plan");
WHEREAS, the Plan currently provides that the maximum number of shares of
the Company's common stock (the "Common Stock") that may be subject to options
granted to any person during any twelve-month period is 750,000;
WHEREAS, pursuant to Section 12 of the Plan, the Company desires to amend
the Plan to provide that the maximum number of shares that may be subject to
options granted to any person during any fiscal year is 1,000,000.
NOW, THEREFORE, the Plan shall be amended as follows effective March 21,
2001, subject to approval by the shareholders of the Company at their next
regularly scheduled meeting:
The last sentence of Section 5 of the Plan shall be amended in its
entirety to read as follows:
"Subject to adjustment as provided in Section 11 hereof, the maximum
number of shares of Common Stock subject to options granted to any
person during any fiscal year of the Company is 1,000,000."
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ANC RENTAL CORPORATION
2001 ANNUAL MEETING
ANC Rental Corporation's Annual Meeting of Stockholders will be held at The
Museum of Art, One East Las Olas Boulevard, Ft. Lauderdale, Florida 33301 on
Monday, May 14, 2001, at 1:00 p.m. (local time).
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[FRONT OF PROXY]
ANC RENTAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ANC
RENTAL CORPORATION FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 14,
2001.
THE UNDERSIGNED HEREBY APPOINTS KATHLEEN W. HYLE, HOWARD D. SCHWARTZ
AND LELAND F. WILSON, AND EACH OF THEM, AS ATTORNEYS AND PROXIES WITH FULL POWER
OF SUBSTITUTION, TO VOTE FOR AND ON BEHALF OF THE UNDERSIGNED ALL SHARES OF
COMMON STOCK OF ANC RENTAL CORPORATION HELD OF RECORD BY THE UNDERSIGNED ON
MARCH 16, 2001, AT THE ANC RENTAL CORPORATION ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD ON MAY 14, 2001 AND AT ANY ADJOURNMENT THEREOF, UPON THE FOLLOWING
MATTERS AND UPON ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING,
AS SET FORTH IN THE RELATED NOTICE OF ANNUAL MEETING AND PROXY STATEMENT, BOTH
OF WHICH HAVE BEEN RECEIVED BY THE UNDERSIGNED.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHARE OWNER. IF THIS PROXY IS EXECUTED BUT NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES,IN
FAVOR OF THE PROPOSED AMENDMENT TO OUR STOCK OPTION PLAN AND IN FAVOR OF
RATIFICATION OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS FOR FISCAL 2001.
Please indicate your vote for the election of directors on the other
side. The nominees for director are: Michael S. Egan, Gordon M. Bethune, J.P.
Bryan, John O. Grettenberger, Sr., H. Wayne Huizenga and William N. Plamondon,
III.
(continued, and to be dated and signed, on the other side)
[BACK OF PROXY]
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
Please mark boxes in blue or black ink.
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The Board of Directors recommends a vote "For All Nominees" on proposal 1 and a
vote "For" proposals 2 and 3.
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37
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1. Election of six directors: Michael S. Egan, Gordon M. Bethune, J.P.
Bryan, John O. Grettenberger, Sr., H. Wayne Huizenga and William N.
Plamondon, III.
For All [ ] Withhold Authority [ ] For All Nominees Except [ ]
Nominees to Vote For All ___________________
Nominees (print name of nominee)
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2. Amendment of the ANC Rental Corporation 2000 Stock Option Plan.
For [ ] Against [ ] Abstain [ ]
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3. Ratification of Arthur Andersen LLP as independent public accountants
for fiscal 2001.
For [ ] Against [ ] Abstain [ ]
- --------------------------------------------------------------------------------
Signature: __________________________
Print Name: __________________________
Dated: __________________________
Please sign this proxy and return it promptly whether or not you expect to
attend the meeting. You may nevertheless vote in person if you attend. Give full
title if an Attorney, Executor, Administrator, Trustee, Guardian, etc. If a
corporation, please sign in full corporate name by authorized officer. If a
partnership, please sign in partnership name by authorized person. For an
account in the name of two or more persons, each should sign, or if one signs,
he or she should attach evidence of authority.
[ ] I intend to attend the meeting.
[ ] I do not intend to attend the meeting.